LA Fitness hobbled by price cuts

SHARES in LA Fitness crashed more than 11% to 84 1/2p today as the group, Britain's biggest health clubs chain, said its margins had been squeezed and that it was slowing the pace of its expansion plans.

Despite attracting a record number of new members in January, LA's most important trading month of the year, its profits have come under pressure from widespread price-cutting in the industry.

Chief executive and former fitness trainer Fred Turok recently launched a cut-price membership scheme for the thousands of City workers laid off in the bear market. While that has helped the group membership surge by 38% year-on-year to a all-time high of 146,000 at 31 January, there had been some impact on margins, he warned.

LA Fitness has 58 clubs, and a further nine are scheduled to open in the second half of the year. But, while the number of quality sites available has increased in recent months, the group said it was slowing down its roll-out plans for both this financial year and the next.

Turok said the group will be able to speed things up again if trading conditions improve, and he remains confident of the LA Fitness concept, and the group's future potential.

LA Fitness floated on the stock market in 1999, at the height of the fitness craze, and its shares surged to more than 460p at one stage.